You very well are aware of the allegation by Cobrapost that the company has siphoned off Rs 31000 crores. If not here’s a short explainer
Anyways, in India, the corporate bond markets are in their infancy. To put that in perspective here’s an excerpt from the CRISIL 2018 Yearbook. The corporate bond market accounts for just 16% of the GDP compared to 46% in Malaysia, 73% in South Korea, and 120% in the US.
Anyway, bond yields and prices have an inverse relationship. Meaning, when bond prices rise, yields fall and vice versa. If you are beginner, then you might ask the question why? Here’s an explainer from PIMCO
A bond’s price always moves in the opposite direction of its yield, as previously illustrated. The key to understanding this critical feature of the bond market is to recognize that a bond’s price reflects the value of the income that it provides through its regular coupon interest payments. When prevailing interest rates fall – notably, rates on government bonds – older bonds of all types become more valuable because they were sold in a higher interest rate environment and therefore have higher coupons. Investors holding older bonds can charge a “premium” to sell them in the secondary market. On the other hand, if interest rates rise, older bonds may become less valuable because their coupons are relatively low, and older bonds therefore trade at a “discount.”
Here’s how DHFL bonds reacted to the news.
And the yields
Oh, in case you are wondering about the normal range of yields:
The 10-year government bond is yielding 7.5%
AAA rate PSU bonds are in the range of 8.5% to 9.5%
AAA rated corporate bonds are in the 9% to 10.5% range.